Judge tying up Marvel's loose ends

Take a beloved character from the superhero. Add the director of the highest-grossing movie ever. Mix them together, and what do you get?

Absolutely nothing.

Spider-Man has been tied up in a web of lawsuits for the last six years, while director James Cameron, along with three studios, has been left dangling outside the courthouse.

But now, after years of paralysis, there has been a flurry of activity.

On Monday, U.S. District Court Judge Roderick McKelvie in Delaware, who is presiding over Marvel Entertainment Group’s Chapter 11 reorganization, decided that long-halted litigation in California could proceed.

But recognizing that the issue of who owns the film rights to Spider-Man is “quite important to Marvel,” McKelvie warned that if the California court is “unable to timely adjudicate” the rights issue, he would resolve the dispute himself.

Meet the main players

The main claimants to Spider-Man are Marvel, which calls the character the “crown jewel” of its comic-book empire, and Metro-Goldwyn-Mayer Inc., which claims to have acquired film rights from a series of legendary but now defunct film companies.

Marvel attorney Carole Handler said, “We have contended that Marvel owns all the rights to make and distribute a Spider-Man motion picture.”

But MGM attorney Christopher Rudd said, “MGM is confident that it has gathered the strands of the Spider-Man rights together such that it now controls the right to produce and distribute Spider-Man.”

Co-stars in the drama

Playing smaller roles are Sony Pictures Entertainment and Viacom, which claim video and television rights. Sitting on the sidelines as a nonparty, but casting a giant shadow, is Cameron, who has been slated to direct a Spider-Man movie since 1991, and now has his deal at Twentieth Century Fox.

Although its rights are ancillary, Sony has left no doubt that it places a high value on Spider-Man. Attorney Robert Schwartz said: “Sony has paid several million dollars for these rights. No one is going to take away Sony’s Spider-Man rights without a bloody fight.”

The story of Spider-Man, a.k.a. Peter Parker, the teenager who develops superhuman powers after being bitten by a radioactive spider, was an instant hit when Stan Lee created him for Marvel Comics in 1963. But, call it the curse of Spidey, every film suitor has expired, leaving the film rights up for grabs in three different bankruptcies.

The complex web

The tortured journey of Spider-Man’s trying to get to the silver screen begins in 1985 when Marvel granted The Cannon Group rights, which would revert to Marvel if a movie wasn’t made by April 1990. Cannon — then in its heyday — was run by Menahem Golan and Yoram Globus.

But a few years later, a nearly bankrupt Cannon was acquired by Pathe Communications, a company financed by Credit Lyonnais and headed by Giancarlo Parretti. After a much-publicized split between Golan and Globus, Golan formed 21st Century Film Corp., while Globus remained at Pathe. In April 1989, Parretti and Globus conveyed the Spider-Man rights to 21st Century.

Years later, MGM would claim Parretti, Golan and Globus defrauded it of the Spider-Man rights by that transfer. In July 1989, Marvel and 21st Century made a new agreement under which rights would revert to Marvel if a movie wasn’t made by January 1992.

A matter of limits

The 21st Century agreement appears to be at the heart of the litigation, with Marvel arguing that it granted limited rights, which have long since expired.

MGM, which acquired 21st Century’s position in that company’s bankruptcy, argues it bought the perpetual right to produce and distribute a live-action Spider-Man movie.

The 21st Century agreement is also the basis for claims by Sony and Viacom. In 1989, 21st Century sold homevideo rights to RCA/Columbia, which ultimately were acquired by Sony. TV exhibition rights were sold to Viacom.

Carolco Pictures Inc. entered the Spider-Man sweepstakes next. In 1991, 21st Century, Marvel and Carolco Pictures Inc. made yet another agreement that replaced the one between Marvel and 21st Century. Under that agreement, rights reverted to Marvel if Carolco didn’t make a movie by May 1996. Carolco acquired the rights with the intention that Cameron would direct a Spider-Man film for Carolco.

Oops again

But Carolco declared bankruptcy in 1996. MGM purchased Carolco’s Spider-Man rights during that bankruptcy and claims that if it isn’t entitled to the rights under the 21st Century agreement, then it gets them under the Carolco agreement.

The first round of litigation began in 1993 when 21st Century sued Carolco in Los Angeles Superior Court for disavowing its obligation to give Golan a producer credit if Carolco ever made Spider-Man. That led to suits by Carolco against Sony and Viacom, who in turn sued 21st Century and Carolco and others.

MGM entered the litigation fray in 1994 following a tumultuous period when it was owned in turn by Parretti’s Pathe, Credit Lyonnais and finally reacquired by Kirk Kerkorian.

3-pact strategy

MGM has mounted a three-pronged challenge to Marvel for the Spider-Man film rights under the Cannon agreement, the 21st Century agreement and the Carolco agreement.

Marvel’s response is that rights under each of these agreements were either terminated or have reverted to Marvel and cannot be interpreted as granting perpetual right to make a Spider-Man movie.

Marvel’s bankruptcy added further complexity to the Spider-Man litigation: Marvel’s trustee in bankruptcy matters filed its own suit in Delaware federal court claiming the Spider-Man rights.

Marvel is just about to emerge from its bankruptcy ordeal. Last month, Judge McKelvie approved a reorganization plan that calls for Marvel to be merged into Toy Biz, the toymaker that holds the toy license on Marvel’s characters.

Even after the film rights to Spider-Man are returned to whoever the courts say is their rightful owner, the story won’t be over. If Marvel wins, the rights presumably will go to the highest bidder, with the hope that Cameron’s interest will make it a valuable property.

Should MGM win, the situation is more complicated. It could partner with another studio, but if the dire reports of the studio’s financial state are true, Spider-Man will have to get there fast if he is going to rescue MGM.

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